Reliance Industries seeks government nod to supply subsidised LPG

The company has also requested the government to treat it on par with state distributors such as IndianOil and Bharat Petroleum on the subsidy front.Sanjeev Choudhary | ET Bureau | July 07, 2016, 07:19 IST

NEW DELHI: Reliance Industries has sought the government nod to distribute subsidised cooking gas to households in a bid to capture a fast-growing market where consumer base is targeted to expand by 60% in three years.

Reliance Industries has recently written to the oil ministry expressing interest in distributing subsidised cooking gas to households, beginning with cities, officials said.

The company has also requested the government to treat it on par with state distributors such as Indian Oil and Bharat Petroleum on the subsidy front, they said. At present, only state-run companies distribute subsidised cylinders as the government doesn’t subsidise private players for selling cooking gas at lower than market rates.

With the implementation of direct cash transfer, the issue of subsidy is less complicated today.

At present, the state companies first recover full price for the gas cylinder from consumers and then within days transfer the subsidy amount to the customers’ bank account.

Within a month, the government reimburses companies for the total subsidy transferred. More than one crore consumers have already given up cooking gas subsidy in the country while many others with an annual income of more than Rs 10 lakh — numbers haven’t yet been declared by the government — have been barred from receiving the subsidy.

But Reliance’s plan is not to restrict itself to just these customers. If it gets government nod to distribute subsidised cooking gas, or liquefied petroleum gas (LPG), it can trigger a bitter battle for market share in cities long dominated by state companies.

Domestic LPG consumption rose 6.6% in May, nearly 45% of which was imported. State companies have a target to add 10 crore LPG consumers in three years to the current active base of 16.7 crore consumers as part of the government drive to take clean fuel to every corner of India.

Most of the new customers will come from the interiors of the country and the companies need to set up new bottling plants and draft thousands of distributors to serve them efficiently.

Bigger cities are, meanwhile, shifting from LPG to piped gas for their cooking fuel, although the pace is much slower than the one seen in the adoption of LPG cylinders. The biggest incremental requirement of LPG in future would therefore come mainly from smaller towns and rural areas.